CFO OF THE YEAR

John Flanagan, Small Private Company

John Flanagan is part of the team that has Howley Bread Group Ltd. on the rise. Mr. Flanagan is chief financial officer of Westlake-based Howley Bread, a Panera Bread franchisee founded in 2000 that has seen its sales rise to $45 million as of last year.

The company keeps a small headquarters staff of eight, but it has 1,000 employees nationwide who make sure customers get their bagels, soups, salads sandwiches and coffee on a daily basis.

Howley Bread's approximately 20 stores are primarily on the East Coast. The company also provides management services to about 10 other Panera stores.

In a small leadership circle, Mr. Flanagan has big responsibilities in assisting Howley Bread CEO Lee Howley. According to his CFO of the Year nomination form, Mr. Flanagan manages all of Howley Bread's financial functions, including accounting, reporting, treasury and cash management, planning and analysis, budgeting and risk management.

He also determines fiscal policies including, but not limited to, capital budgeting and borrowing, and performs due diligence on merger-and-acquisition opportunities.

Mr. Flanagan joined Howley Bread in 2002. Since then, according to the nomination form, his major accomplishments include:

redesigning the company's budget process and tools to use industry best practices. Results included measurable cost savings and what Howley Bread calls “unprecedented levels of forecasting accuracy.” Mr. Flanagan is credited with reducing the margin of error on store-level sales forecasts to 0.3% from 6%.

overseeing 25 restaurant openings in five years;

designing and implementing a centralized payroll processing model, resulting in a 65% reduction in processing costs per pay period;

implementing new software that improved productivity through integration with relevant systems, including accounting and payroll;

introducing a consumer-driven health plan that the company says “reduced the claims-to-premiums-paid” ratio to 54% over the last 24 months, enabling a 19% premium decrease for the employer and a 34% decrease for employees over the same time period.”

Mr. Flanagan also is founder and lead member of the Panera Franchise CFO Council. The group was designed and endorsed by Panera to help its franchise and corporate finance executives exchange ideas and share information and best practices.

All companies face challenges in the down economy, and restaurants — which need to capture consumers' discretionary spending — are in a tougher spot than most. But Howley Bread finds itself with a bit of an advantage, as analysts say Panera is well positioned in the fast-casual category to keep people coming through the doors. Panera has almost 1,300 locations nationwide, more than 700 of which are franchised.

For instance, Morgan Keegan analyst Robert M. Derrington recently upgraded his rating on Panera stock to “outperform” from “market perform,” calling it a good value now that the share price has dropped in the past month.

In a research note, Mr. Derrington also said lower wheat prices in 2009 could boost earnings per share for the year.

And he said Panera — and in turn franchisees like Howley Bread — may benefit from its “high- quality foods” and its “low” average check of between $7 and $8.

Mr. Flanagan said 2007 was a tough year for the company, but 2008 has been much better, as Howley Bread “developed a strategy that focused only on the items we had complete control over.”

Top-line sales might not be as robust as hoped for, he said, but strong management of inventory and vendor relationships is keeping the bottom line quite healthy.

Investor's Business Daily this month also noted that analysts believe Panera “is shielded a bit from the worst of the slowdown because of its clientele: They tend to be higher-earning workers. And Panera offers them breakfast and lunch options, relying less on the fickle dinner crowd.”

Prior to joining Howley Bread, Mr. Flanagan was director of finance and controller at Struers Inc., a subsidiary of Roper Industries Inc. in Cleveland that makes equipment for materialographic surface preparation of solid materials. From 1992 to 1999, he was an audit supervisor at Hausser + Taylor LLP in Cleveland.

Mr. Flanagan earned his bach-elor's degree in accounting from John Carroll University and an MBA from Cleveland State University.

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